Joe Madison, a local radio host, confided to Anthony A. Williams, then the D.C. mayor, that he and his wife were thinking of moving to the District from Derwood.

Buoyed by encouraging words from Williams, the Madisons bought a four-level-plus-garage townhouse in the gated Walter E. Washington Estates in the Washington Highlands section of Southeast.

Five years later, they're sitting pretty on a property that has "appreciated rapidly," he said.

Washington Highlands is "an untapped treasure," said Monica Brewster, 31, a real estate agent who lives in the neighborhood. Encompassing about 300 acres at the southern tip of Southeast, its streets are a checkerboard of colorful low-rise apartment complexes and littered empty lots, modest red-brick houses with tidy flower beds and squat public housing, elegant townhouses and boarded vacant houses.

People amble by, children play in the streets, parking is plentiful. Construction crews mix up noise and rubble at multiple renovation sites.

Brewster directs clients -- young professionals, renters, residents from the District and out-of-town investors who cannot afford to buy where they live in New York City and Los Angeles -- to this neighborhood.

They search for a bargain under $200,000 and think they're priced out of the market, she said. "They marvel that they can get something here at this price."

Renovated two-bedroom, one-bath condominiums are available, Brewster said. There are also a fair number of rowhouses and semi-detached houses, but they are likely to need significant work at that price.

Security guards, teachers, federal employees, mortgage bankers and lawyers live side by side. Madison describes the area as "a good mix of professionals and working class."

This used to be the last part in the city people paid attention to, said Greg Kendall, 45, a lifelong Southeast resident who works as a financial adviser and is president of the Walter E. Washington Estates homeowners association.